Brussels, 15/02/2005 (Agence Europe) - The Alliance of Liberals and Democrats for Europe (ALDE) group of the European Parliament has called for the reform of the Stability and Growth Pact (SGP) to restore the credibility and efficiency of the Pact. Although Thursday's Ecofin Council will try to go into detail on this issue, the members of the ALDE group have drawn up a proposed resolution on ways of improving the implementation of the Pact. According to Graham Watson, “the credibility of the Pact has been undermined over the past years by a number of serious and persistent breaches of the key reference values by both small and large Member States of the euro zone”. The British Liberal Democrat particularly criticised “the excessive rigidity of its application” and “the overt political interference [in its implementation]”.
Changes to the Pact should “command widespread respect, so that the excessive deficit proceedings can be taken seriously” and irresponsible budgetary policy can be avoided, said his compatriot Chris Huhne, who calls on the Member States to “play as a team” and thus avoid “pro-cyclical fiscal policies, provide reliable data, treat each other as equals and accept early warning advice from the Commission”.
The proposals of the ALDE firstly stress the reinforcement of the preventive plank of the Pact (which has also been emphasised by the President of the Ecofin Council, Jean-Claude Juncker: Ed), especially by creating budgetary reserves in favourable growth periods and the early implementation of the reinforced early warning mechanism provided by the Constitution. Stressing that the Member States' forecasts must be “realistic”, without excessive optimism on their future deficit ratio, the MEPs propose that each Member State should have an “independent body to conduct economic analyses (public, private or university)” to draw up likely economic scenarios. When excessive deficit proceedings are launched, a “clearer code of conduct” would help to guarantee the total absence of political interference. Lastly, the proposed resolution envisages a certain amount of flexibility for the Member States in an excessive deficit situation presenting a “low and sustainable” ratio of indebtedness.